Market Pace Slows Down: Fed's Decision Day | June 14, 2023

A slight deceleration is anticipated in the market's momentum as attention shifts to the Federal Reserve's actions. Nasdaq 100 and S&P futures have shown gains, with increases of 0.3% and 0.2% respectively, while Dow futures have recorded a minor 0.1% decline. Despite this slowdown, investor risk appetite remains strong, underlined by the S&P 500 reaching a one-year high and extending its gains for the fourth consecutive session. Across multiple asset classes, optimism persists with rising oil prices and tightening credit spreads. However, a growing skepticism around potential rate cuts by central banks this year has triggered a sovereign bond selloff, as investors adjust their expectations to accommodate longer periods of higher rates.

As for bond market trends, both the 10-year and 2-year Treasury yields have seen a decrease of 4 basis points, further emphasizing the market's anticipation of steady rates from the Fed. While a rate hike might be signaled for July, this will largely depend on incoming data. Future projections suggest a 25 basis point increase in the median dot by year's end, with the Fed likely cutting rates by 75 basis points next year. In the lead-up to the market opening, the May Producer Price Index (PPI) is expected to drop slightly, with the core PPI seeing a marginal increase. This data primarily impacts corporate pricing power and is unlikely to suggest significant profit-led inflation, as such inflation trends usually occur at the end of supply chains and are not representative of the broader economy. #FOMC #CPI #PPI #SPX #NDX #MarketUpdate https://nostr.build/i/6e5668336d0f923f3ef34bb549dc8bfaf2a797d9b89e1821b82403cbab1009d7.webp